Illness depletes uninsured older adults' finances

NEW YORK (Reuters Health) - For older adults without health insurance, a major medical problem could become a financial disaster, according to a new study.

The study followed more than 3,600 Americans ages 51 to 64 who had been recently diagnosed with a major health problem, such as heart disease, cancer, emphysema or diabetes.

Researchers found that study participants who lacked health insurance lost up to 50 percent more of their financial assets within 2 years compared with their insured counterparts.

People who lacked insurance typically went through $4,200 more than those who had insurance, the researchers report in the journal Health Services Research.

The findings, they say, highlight the financial vulnerability of Americans who lack private insurance and are not yet old enough to qualify for Medicare, the federal health insurance program for adults age 65 and older.

It's estimated that more than 4 million Americans older than age 55 have no health coverage. But until now, little has been known about the financial consequences of that gap.

"We found that for a typical household this costs -- in lost savings -- between one-third and one-half of their total accumulated financial assets relative to households with similar, but insured individuals," lead researcher Keziah Cook, a Ph.D. candidate in economics at Northwestern University in Evanston, Illinois, noted in a written statement.

But the potential losses are likely greater than that, she and her colleagues note in their report.

The study only considered a portion of the financial losses that could stem from a major illness -- focusing on changes in people's savings and checking accounts, CDs and stocks and bonds for up to 2 years.

But an illness can also slash into older adults' incomes or home equity, for example, and the effects could persist for years, the researchers point out.

As the U.S. continues to grapple with healthcare reform, the findings also suggest that an expansion of the current system could offer many older Americans financial protection, according to Cook's team.

Among the nearly 3,200 study participants who had insurance, there was generally "no measurable loss of assets," the researchers note.

It remains to be seen whether an expansion of the current insurance system to cover a greater number of older adults is "achievable and affordable," Cook and her colleagues write.

"Until such reforms are implemented," they conclude, "millions of Americans are potentially one illness away from financial catastrophe."

SOURCE: Health Services Research, online October 13, 2009.

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